By Atossa Araxia Abrahamian and Lisa Baertlein
NEW YORK Oct 23 Coffee pot, meet tea kettle.
Starbucks Corp, which has doubled down on its tea
bet, is opening its first Teavana tea bar in New York City this
week, aiming to do for tea, the world's second most popular
beverage after water, what it has done for coffee.
"This is not your mother's Lipton tea, just as Starbucks
wasn't Folgers. The difference between the quality of tea at
Teavana [and other teas] is the difference between fresh
squeezed juice and concentrate," Starbucks Chief Executive
Howard Schultz said on Wednesday at a press preview at the new
store on Manhattan's Upper East Side.
According to The Tea Association of the USA, tea is the most
widely consumed beverage in the world next to water. But while
tea is the more popular beverage, coffee is king when it comes
Global coffee retail sales were $75.7 billion in 2012 versus
$40.7 billion for tea, according to market research firm
Euromonitor International. Still, Starbucks said it sees tea as
a $90 billion market opportunity.
Seattle-based Starbucks' $620 million purchase of tea store
chain Teavana Holdings Inc last year was its largest acquisition
Starbucks' Manhattan Teavana store is due to open on
Thursday, and aspires to have a "zen-like" atmosphere fragrant
with spices. The shop will also sell food such as chocolate
Schultz said the average purchase per customer at Teavana
stores is higher than at Starbucks, where consumers typically
spend $5 per visit.
The company is not concerned that Teavana will cannibalize
Starbucks business because "most people who are tea drinkers are
not crossing over to coffee," said Schultz.
The new tea bar's competitors include Chicago-based Argo
Tea, which has cafes in U.S. cities as well as Beirut, Abu
Dhabi, Doha, Dubai and Kuwait City.
When it was bought by Starbucks, Teavana had about 300
stores in the United States, Mexico, Canada and Kuwait that sold
loose-leaf, exotic teas.
Starbucks said it would decide later whether to add tea bars
to existing Teavana stores. Schultz said the company would
likely add overseas locations while it expanded its U.S.
"Some of the highest volume stores are in the Middle East,"
Tea is not new territory for Starbucks. It bought Tazo tea
for $8.1 million in 1999 and built it into a billion-dollar
brand through sales at Starbucks stores and grocery stores.
The company opened a Tazo tea store in Seattle last year and
plans to convert it to a Teavana location that will open in
Starbucks also has opened four Evolution Fresh juice bars
since its $30 million purchase of the juice maker in 2011.
Lipton is owned by Unilever PLC and Folgers is
owned by J.M. Smucker Co.